Jefferies' Christopher Wood Doubles Down On India’s ‘Structural Story’ Despite Nifty Down 6% In 2026

The year 2026 has been a turbulent one for investors who invest in the Indian stock market. The Nifty 50 has delivered negative returns of -6.19 per cent so far in 2026 as of August 10. The negative returns have come amid constant volatility in the global market and a disruption of supply chains due to the US-Iran conflict.

Along with these factors the selling of Indian equities by Foreign Institutional Investors (FIIs) has also added to the headwinds faced by the domestic market. However, despite these tepid returns and broader market uncertainty, Jefferies' global head of equity strategy Christopher Wood remains highly optimistic about India's economic trajectory.

Christopher Wood's India Prediction

Wood believes that despite how 2026 has turned out for the Indian securities market, the underlying ‘India Story’ is structurally sound and presents a lucrative opportunity for active investors.

In Jefferies’ latest ‘Fear and Greed’report, Wood has predicted that that the Indian Rupee will stabilise due to robust capital inflows, allowing the domestic economy to thrive independently of global market volatility.  According to the report, Wood is also actively overhauling his India long-only equity portfolio to capitalise on the shift.

Why Is Christopher Wood Positive on India

Despite the negative returns which have been the part of domestic portfolios in 2026, Wood is positive on India due to a decade-high bank credit expansion, robust automobile and property demand, massive foreign currency deposits from non-resident Indians, and surging foreign inflows into tax-free Indian government bonds. Here’s a look at some of the key factors which have kept Wood positive on India:

Decade-High Bank Credit Expansion

In his report, Wood has identified domestic credit expansion as a key pillar of India's present economic momentum. He observes that overall bank credit growth has hit the 17 to 18 per cent range, which is the highest recorded in over a decade. Highlighting the driver of this credit surge, he points directly to business spending.

"The strongest area of growth is in corporate lending which is now running at 20 per cent year-on-year (YoY)," Wood said.

Robust Automobile and Property Demand

Wood also mentioned in the report that India’s economy is also functioning well and acting as a buffer against external market shocks. Wood believes that core consumption metrics are holding steady, reinforcing the resilience of the domestic market.

Emphasising the strength of these traditional sectors, he shares an observation that demand within the automotive and real estate sector has remained healthy along with growth in broader consumer credit such as agriculture loans.

"This compares with 17 per cent YoY growth for loans to the agriculture sector and 16 per cent YoY for retail loans. Meanwhile, auto and property demand also remains healthy," Wood said.

Foreign Currency Deposits

The Reserve Bank of India (RBI) introduced the Foreign Currency Non-Resident Bank (FCNR-B) scheme to raise foreign currency deposits from non-resident Indians to support the rupee.

The FCNR-B scheme allows Non-Resident Indians (NRIs) to deposit funds in foreign currencies into Indian banks at fixed yields with concessional exchange swap rates, providing returns to NRIs and helping the RBI bolster foreign exchange reserves to defend and stabilise the Indian rupee.

Wood views the scheme as a success that is injecting liquidity into the system and stabilising the currency. Detailing the volume of capital the scheme is attracting, Wood projects further exponential growth.

"There have so far been $41 billion of inflows through the scheme and that is expected to double to $80-100 billion in the next two months when the scheme ends," Wood said.

Surging Foreign Inflows Into Indian Bonds

The recent government move to make ownership of Indian government bonds tax-free for foreign investors is another major positive factor. By removing the tax on interest income, India has become an attractive destination for global debt investors. Quantifying the immediate market reaction to this policy shift, he provides the latest inflow data.

"As a result, there have been net inflows of $8.7 billion since the start of June 2026," Wood said.